HOW OFTEN SHOULD A SOVEREIGN DEFAULT ON ITS DEBT?

HOW OFTEN SHOULD A SOVEREIGN DEFAULT ON ITS DEBT? Back toward the end of the last century, a friend and I used to joke from time to time about the case of a hypothetical country which wanted to maximize its gains from borrowing and then defaulting (interestingly, we called the imaginary country Argentina). We thought it would take a generation—say, 33 years—for a new generation of lending experts to come along who had not lived through the previous default and would lend again. Of course, we allowed for mistakes by lenders and our general conclusion was that maybe 25 years would accomplish the forgetting. It looks as if from the real world example of Argentina that the period for being able to borrow after a default is closer to ten years.